HDB rents increase due to demand from PRs

Accordingto the Singapore Real Estate Exchange (SRX), which collates transactions bymajor property agencies, accounting for more than 80% of the HousingDevelopment Board (HDB) rental market, median HDB rentals rose 10% in the 12months to June to S$2,200 per month. The rental rates were the highest since Q1of 2006. Monthly median rents for five-room units are currently about S$2,500monthly.

Inaddition, landlords in popular, mature estates like Geylang, Marine Parade andToa Payoh are able to charge a premium. Median monthly rents for five-room HDBflats in these estates are S$2,900, with some choice units close to the MRTstations even exceeding the S$3,000 mark.

Arecent Ministry of Trade and Industry statement about June's inflation ratenoted that accommodation cost increases, have been stronger than expected, withleasing contracts continue to be renewed at considerably higher rates,especially in the HDB segment.

Demandfrom Singapore permanent residents (PRs) has been contributing to the rising rentals,as the slew of residential cooling measures has made renting more attractivethan home purchase.

Underrules just unveiled in July, PRs who want to sublet their HDB flats will alsofind it harder to do. This is the deter those who are buying the flats forinvestment. The entire duration PRs can sublet their flats, is now capped atfive years. They are also not allowed to keep their flats unoccupied afterhitting the cap. If PRs no longer need the flats for their own occupation, theywill have to sell the flats.

Furthermore,HDB owners can rent out their flats only after the five-year minimum occupationperiod, unless prior HDB approval is given. They must also dispose of theiroverseas properties within six months of an HDB purchase.